Interesting how there is more and more talk about the arctic

Offshore
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this arcticlefrom OilOnline.com

OCS plan to include Arctic

By: Audrey Leon

7/3/2012

Frontier areas of the Alaskan Arctic will be included in a proposed final Outer Continental Shelf (OCS) offshore oil and gas lease program announced by BOEM and the Department of the Interior on 28 June 2012.

The final leasing program for 2012 to 2017 will include 15 potential lease areas, including 12 in the Gulf of Mexico and three off the coast of Alaska, the Interior department said. The Alaskan program will includes planning areas in the Chukchi and Beaufort seas and the Cook Inlet planning area off south-central Alaska.

The OCS plan has its share of industry critics. The National Ocean Industries Association (NOIA) criticized the plan for omitting the East and West coasts, particularly offshore Virginia, as well as delaying Alaskan sales.

‘This deeply disappointing “no new access” plan does not reflect the comprehensive, “all of the above” energy policy touted by the Administration, nor does it keep pace with the energy policies of foreign nations that are expanding their offshore access to develop badly needed oil and natural gas,’ said NOIA president Randall Luthi. ‘Taking the entire East and West coasts off the table and further delaying Alaska sales clearly shows this Administration is not following its own advice to lessen our dependence on foreign sources of energy by bolstering production here at home.’

The International Association of Drilling Contractors (IADC) said it welcomed the announcement, however it also called for the US government to lift moratoria and open all US waters to drilling.

‘We urge the President and Congress to expand OCS access beyond Alaska and the Gulf of Mexico,’ said IADC President/CEO Stephen A. Colville. ‘The technology and investment appetite is proven. Drilling contractors are ready and able to do the job.’

BOEM director Tommy Beaudreau said offshore oil and gas leasing does not have a ‘one size fits all’ model, stating that Alaska has substantial environmental challenges, and social and ecological concerns that require a different approach.

‘We are committed to moving forward with leasing offshore Alaska, and scheduling those sales later in the program allows for further development of scientific information on the oil and gas resource potential in these areas and further study of potential impacts to the environment,’ said Deputy Secretary of the Interior David J. Hayes. “We must reconcile energy resource development with the sensitive habitats, unique conditions and important other uses, including subsistence hunting and fishing that are present in Alaska waters.’

Seems this talk is getting more and more common. I guess if Shell does actually manage to drill to depth this season and comes back home with a big play up there then the whole balloon might well go up pretty fast. Still, it will take lots of time to build the equipment and get infrastructure in place. Of course, the opposition of the eco crowd will also need to be overcome but if this season goes well then the wind will be blowing more and more steadily from the side of development. Once the momentum gets going then there won’t be much to slow it down…

…unless there’s an accident!

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It almost seems to me that our wonderful government is dragging there feet on purpose. Perhaps the libitards are hoping for another accident to use a green reason to shut down the whole industry this time. I hope that shell does well up there, it will mean alot of business and jobs for many people. A fairly reliable source has told me Stat oil is already making plans for a project up there next year as well.

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[QUOTE=ChiefRob;73365]It almost seems to me that our wonderful government is dragging there feet on purpose. Perhaps the libitards are hoping for another accident to use a green reason to shut down the whole industry this time. I hope that shell does well up there, it will mean alot of business and jobs for many people. A fairly reliable source has told me Stat oil is already making plans for a project up there next year as well.[/QUOTE]

Remember that there already have been a couple of lease sales made up in the Arctic already so I don’t think holding off on having another immediately is for the purpose of placating the eco lobby but instead might well be to keep the blocks in reserve for the future when they might well be worth a whole lot more $$$ than they will be until some big discoveries are made up there.

Let’s just be glad that the courts haven’t caved in this time and thaty Shell is already underway to drill this season. A lot rides on this summer and what they are able to bring back with them.

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[QUOTE=ChiefRob;7336 “libitards”

“Libertards” What a wonderful term !

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Well sir you may very well be correct, what ever the reason I hope Shells venture is a sucess, it will only be good news for everyone else.

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I’m reckoning those LNG boats Mr Guidry is building will be for Alaska. He also upped the order from two to four. So either he knows something or it’s a gamble. Either way it ought to be fun watching him try to outmaneuver Gary.

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[QUOTE=ChiefRob;73365]It almost seems to me that our wonderful government is dragging there feet on purpose. Perhaps the libitards are hoping for another accident to use a green reason to shut down the whole industry this time. I hope that shell does well up there, it will mean alot of business and jobs for many people. A fairly reliable source has told me Stat oil is already making plans for a project up there next year as well.[/QUOTE]

The “wonderful government” you deride as “libtard” did not get elected by opposing drilling for oil and they are well aware that they cannot get reelected by stopping drilling for oil. What the current regulators do seem to be doing is finally at least going thru the motions of abiding by the same rules as other countries in harsh climates have insisted upon for many years. It will no longer be acceptable to have an environmental mitigation plan that does not suit the drilling environment. It is a matter of record that BP submitted a plan for the Macondo well that included protecting the seals and walruses there in the Gulf of Mexico. It was an cut and paste plan that the regulators of the day approved. They obviously had not even read the plan so I don’t feel that it should be a great burden for those who we taxpayers pay to protect our environment and the lives of those that depend on it to insist they actually take the time to READ the application.
Evidently things must be going well in the drilling and supply business as there seems to be a lot of hiring going on.

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Things are going well but they still suck!

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[QUOTE=tengineer;73378]The “wonderful government” you deride as “libtard” did not get elected by opposing drilling for oil and they are well aware that they cannot get reelected by stopping drilling for oil. What the current regulators do seem to be doing is finally at least going thru the motions of abiding by the same rules as other countries in harsh climates have insisted upon for many years. It will no longer be acceptable to have an environmental mitigation plan that does not suit the drilling environment. It is a matter of record that BP submitted a plan for the Macondo well that included protecting the seals and walruses there in the Gulf of Mexico. It was an cut and paste plan that the regulators of the day approved. They obviously had not even read the plan so I don’t feel that it should be a great burden for those who we taxpayers pay to protect our environment and the lives of those that depend on it to insist they actually take the time to READ the application.
Evidently things must be going well in the drilling and supply business as there seems to be a lot of hiring going on.[/QUOTE]

The deep water horizon incident has a thread of its own and arguments have been going on there since the day of the accident, I don’t wish to drag that over here. The origianl rules were never enforced, everyone knows that as well. The safety history and culture of this industry is phenomal considering the amount of oil that gets drilled and transported every day. Even as bad as an accident as that was it is still less than a decimal point of one percent of what goes on everyday. That is due to everyone of us doing a outstanding job everyday. However the knee jerk reaction of our libetard government shuting down an entire indusrty is hog wash. If BP made a mistake shut them down and make them pay and prove they can abide by the safety rules that were never enforced in the fisrt place. There have been countless bus crashes that have killed more people than DWH. Did they shut down the entire bus industry. Amtrak can’t seem to keep there trains on the tracks, did they shut down all the railroads. NO. How many plane crashes have there been, the only time they have shut down all the airlines is when they were crashing into the twin towers, and then it was only for a couple days. That is the only word I can think of to describe shuting down a whole industry because of another persons mistake is libetard.

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Here’s an article from today’s RigZone

The Final Frontier? Arctic Drilling Gets Serious

Jaime Kammerzell, Rigzone Contributor 7/3/2012

Shell made headlines in May when the Bureau of Safety and Environmental Enforcement (BSEE) approved its oil response plan for its exploratory program in the Chukchi and Beaufort Seas. Shell awaits drilling permits from the BSEE to start drilling for oil. While waiting for approval, Shell has been testing its new oil spill containment system.

The supermajor had hoped to start drilling by July, but heavy polar ice is postponing drilling to August, which does not give the operator much time. Shell plans to wrap up exploratory drilling by September 24 in the Chukchi Sea and October 31 in the Beaufort Sea.

According to the U.S. Geological Survey, the Chukchi sea basin is estimated to hold 1.2 billion barrels of oil equivalent (Bboe), compared to the whole Arctic, which holds about 90 Bboe and 1,670 trillion cubic feet (Tcf), which is about 13 percent of the world’s undiscovered conventional oil and 30 percent of its undiscovered natural gas.

Operators drilling the Arctic in the 1980s and 1990s used ice breakers to get the rigs to offshore drilling sites, but Shell says it will now only drill during ice-free months to minimize the disturbances to wildlife.

Shell plans to use its newly refurbished Kulluk drilling rig, which has been in cold storage in the Canadian Arctic for about 10 years. Shell spent about $150 million to equip the 29-year old rig with four new environmentally friendly diesel engines. The ship also has a 160-foot derrick and a funnel-shape hull with flared sides that will deflect ice and break it up as it runs under the hull.

The operator also installed 4,200 barrels in onboard waste storage to achieve “zero discharge” targets – “meaning no wastewater, ballast water or drilling muds and cuttings will be discharged into the Arctic seas. Instead, they will be held aboard the two drill ships for permanent disposal at a certified landfill in the Lower 48 states,” Shell’s vice president for Alaska operations, Pete Slaiby said in a meeting with reporters on board the Kulluk drilling rig in the Seattle shipyards in May 2012.

Also key to Shell’s exploratory drilling project is a preconstructed capping stack, which will be positioned offshore near the drillships so it is ready to deploy in the event of an uncontrollable well blowout.

Shell plans to have the Noble Discoverer (mid-water drillship) in the Arctic this summer as well. It will drill three exploratory wells in the Chukchi Sea while the Kulluk will drill two exploratory wells in the Beaufort Sea.

In the midst of Shell’s activity, Interior Secretary Ken Salazar announced that parts of the Chukchi and Beaufort Seas will be open for lease sale in about four years. Specific Arctic areas were part of the Interior’s five-year lease plan that went to Congress on June 28.

International Interest

Renewed interest in the Artic has spread beyond U.S. waters. In early June 2012, Secretary of State Clinton toured the Arctic waters off Norway to emphasize U.S. interest in economically and safely developing the region.

Safe environmental practices is also one of the top priorities of the Arctic Council, an advisory group of eight nations – the United States, Canada, Russia, Norway, Finland, Iceland, Sweden and Denmark, which handles foreign affairs for Greenland, as well as groups representing indigenous people directly affected as ice and snow retreat. The council shares standards, experiences and technology.

Though exploration drilling is lively in Arctic waters, council members note that the oil boom is at least eight to 10 years away. But if Greenpeace has any say in it, there won’t be any drilling in the Arctic.

On June 21, the environmental group’ Executive Director Kumi Naidoo said in a statement: “The Arctic is coming under assault. A ban on offshore oil drilling … would be a huge victory against the forces ranged against this precious region.”

Operator plans

Russia’s Rosneft is just one active operator in the Arctic. Despite 300 days per year of ice filled waters, Rosneft has partnered with ExxonMobil to explore three untapped fields in the Kara Sea, believed to contain about 85 Bboe. It is a win-win deal as Rosneft gains access to western technology capable of drilling the Arctic and ExxonMobil gains a percentage of the potentially oil-rich offshore Arctic fields.

ExxonMobil and Rosneft released a statement in mid-June announcing agreements to jointly develop tight oil reserves in Western Siberia and establish a joint Arctic Research Center for Offshore Developments. The agreements support implementation of the companies’ August 2011 long-term strategic cooperation agreement.

The partners plan to expand and expedite development of oil reserves in tight low-permeability formations in Western Siberia using advanced technologies that ExxonMobil has successfully employed in North America.

The agreement establishes a pilot program to determine the technical feasibility of developing the reserves and is an extension of a technical research program, which Rosneft and ExxonMobil signed in April 2012.

According to the release, Rosneft and ExxonMobil plan to approve a work program for selected Rosneft license blocks, which will include geological studies and drilling of Bazhenov and Achimov reservoirs. Drilling is scheduled to begin in 2013.

ExxonMobil will finance the geological studies and exploratory drilling. Participating interests in a potential development phase will be 66.67 percent for Rosneft and 33.33 percent for ExxonMobil.

The other agreement signed on June 15th enables ExxonMobil to join the new Arctic Research Center, which will provide a full range of services to support all stages of oil and gas development on the Arctic shelf, including ice monitoring and management, design of ice resistant offshore vessels, structures and Arctic pipelines, logistics and safety, the release says.

Safety standards will be a priority for the center, which will have its own special marine incident warning and prevention department focused on preventing and immediately responding to emergencies.

Rosneft has also struck a deal with Eni to jointly develop reserves in Russia’s Barents and Black Seas. Eni will hold a 33 percent stake in the fields, which are estimated to contain 36 Bboe.

Rosneft struck a third deal recently with Statoil who will hold a 33 percent stake in four fields in the Barents Sea and in the Sea of Okhotsk. The fields are estimated to hold about 15 billion barrels and 1.8 trillion cubic meters of natural gas.

According to the latest Ernst & Young Oil & Gas Tax Guide, countries exploring the Arctic, specifically Russia, are expected to revise their tax legislation to attract more investors.

Onshore activity

Arctic drilling is not limited to offshore fields. On May 2, 2012, the United States Energy Secretary Steven Chu said the government agency had completed an unprecedented test of technology in the North Slope of Alaska that was able to safely extract a steady flow of natural gas from methane hydrates – a vast, entirely untapped resource that holds enormous potential for U.S. economic and energy security. Now the Energy Department is launching a new research effort to conduct a long-term production test in the Arctic as well as research to test additional technologies that could be used to locate, characterize and safely extract methane hydrates on a larger scale in the U.S. Gulf Coast, the announcement read.

“The Energy Department’s long term investments in shale gas research during the 70s and 80s helped pave the way for today’s boom in domestic natural gas production that is projected to cut the cost of natural gas by 30 percent by 2025 while creating thousands of American jobs,” said Secretary Chu. “While this is just the beginning, this research could potentially yield significant new supplies of natural gas.”

The project is a joint effort among the Energy Department, ConocoPhillips, and the Japanese government. Japan has expressed an interest in U.S. natural gas exports as it cuts back on its nuclear energy program after the nuclear power generation accident in 2011.

Lisa Murkowski of Alaska seems to think that supplying Japan with natural gas is a smart move. On May 1, Murkowski said in a statement, “Alaska’s gas is the perfect fit to meet Japan’s energy needs.”

“Japan is hoping to switch a major portion of its power generation to natural gas, but it lacks an affordable and reliable source for that gas,” Murkowski said. That presents a unique opportunity for Alaska, which has long been rich in resources but short on markets. We need to move quickly to seize this opportunity and ensure that Alaska’s gas is the energy of choice for Japan

This may sound odd but

the Chukchi sea basin is estimated to hold 1.2 billion barrels of oil equivalent (Bboe)
doesn’t seem like a whole hell of alot and certainly not worth the cost to do business up there. I thought the number was like 16Bboe up there? I have to wonder if they missplaced the decimal?

I’m also noticing this for the first time:

The supermajor had hoped to start drilling by July, but heavy polar ice is postponing drilling to August, which does not give the operator much time. Shell plans to wrap up exploratory drilling by September 24 in the Chukchi Sea and October 31 in the Beaufort Sea.

That is not much time for three wells even if they are in shallow water and not particularly deep holes? I have heard that Shell is really more interested in just starting the wells this season rather that drilling them down, but it would be much more favorable for the share values if they come home with a serious play discovered that nothing to show for all the hoopla.